Chicago's hottest neighborhoods New Homes scouts the city's up-and-coming areas
The rapid rise in real estate prices comes despite relatively low inflation. Economic growth and strong production of high-paying jobs has caused housing costs to skyrocket, especially in metropolitan areas where the high-tech market is strong. A recent study by the U.S. Department of Housing and Urban Development shows that the cost of for-sale housing has risen at twice the rate of inflation on average. In Chicago, development has been spreading out from downtown in concentric rings. Generally, the closer a ring is to the Loop and the lake, the higher the prices. This trend is not always consistent, however, and of course, a wide variety of factors affect neighborhood housing values. So how does one determine which neighborhoods are “hot?” Well, that of course depends on how you define the term. For real estate types, a neighborhood is often considered hot in the early stages of rehabbing and development, especially if it’s somewhat run-down, with bargain prices and big room for appreciation. That’s the outlook of the professionals, though, who see communities in terms of dollar signs. Home buyers are certainly concerned with investment value, but if they plan to live in a neighborhood for five or ten or twenty years, it’s not the only or the biggest concern. Our list of “hot neighborhoods,” admittedly a subjective one, factors in appreciation, but also takes other considerations into account – safety, services, convenience, amenities – the things home buyers are concerned with. Certain neighborhoods, most notably Lakeview and Lincoln Park, have not been included despite high marks for livability and rapid recent appreciation. Prices in these areas simply are already too high for the neighborhoods to be considered hot. Buyers are not likely to lose money in Lincoln Park, but the days when they could bank on making a lot of it at resale are gone. The median single-family house sold for $740,000 in Lincoln Park during 1999, a nearly 30 percent increase over two years ago. An economic downturn would certainly boost market times, which have been surprisingly low even for very high-end product. A softer economy might also reveal that some buyers have been overpaying for housing in this and other desirable lakefront neighborhoods. Not everyone holds this view. Some experts point out that million-dollar houses are commonplace on both coasts and propose that Chicago real estate has long been undervalued. But real estate on the coasts also has been subject to vicious boom-and-bust cycles that Chicago has managed to avoid.
Is the Near West Side hot? It certainly has been. The median price for condos and townhouses rose almost 80 percent from 1997 to 1999, making the neighborhood the city’s leader in appreciation for attached housing. Thousands of new housing units are underway, and new stores and services are beginning to pop up. Prices likely will continue to rise, but in terms of appreciation the time to buy here was a few years ago. With a median condo cost of nearly $210,000 during ’99 and such dramatic recent price hikes, how fast can home values continue to rise? The neighborhoods we have decided to call “hot” are not necessarily places where buyers will get rich by investing in real estate, but these areas do show the promise of steady, above-average appreciation for years to come. They also meet certain minimum standards for livability. Some neighborhoods not on the list may well be “hotter” in terms of investment value, but if they did not have a certain level of safety or services we did not include them. Perusing our list of hot neighborhoods is not a bad way to begin the search for a home, but the bottom line in selecting a location should be the most common sense criterion: does it seem like somewhere you’d like to live? If a neighborhood passes that test, odds are you’re making a good decision. These days, almost any neighborhood in the city seems like a safe bet. Albany Park Bordered roughly by Montrose, Foster, Pulaski and the North Branch of the Chicago River, Albany Park has become one of the city’s most diverse neighborhoods. The flavor here ranges from Middle Eastern to Latin to Korean to Serbian. The restaurants and shops reflect that colorful mix. There is a fair amount of poverty in the neighborhood, but pressure from the Ravenswood / Lincoln Square area to the east has been pushing up property values and encouraging condo conversions, especially on the eastern edge. Ravenswood Manor, which despite its name is really a part of Albany Park is a beautiful riverfront enclave whose vintage apartment buildings are rapidly going condo. Housing in this corner of the neighborhood is getting pricey, but go a few blocks west or north and a house costs much less than in Ravenswood, directly east – one sign of a potentially hot neighborhood. Edgewater Parts of Edgewater, notably the idyllic enclave of Lakewood Balmoral, are beyond hot. Prices of the magnificent houses in this spot already have gone through the roof, though they will probably continue to rise. But much of the neighborhood, which stretches roughly from Foster to Devon and from the lake to Ravenswood, remains affordable. It may not be affordable for long, however. The median condo price rose 42.38 percent, to $113,900 in 1999, from $80,000 in 1997. That’s a significant jump in just two years, but the median condo is still less half the cost of its counterpart in Lakeview, which is also on the lake, also was pioneered by the gay community, and sits just a mile and a half south. Edgewater has a solid housing stock and a growing number of condo conversions. Centered around Andersonville (Clark Street between Foster and Bryn Mawr), the neighborhood has many great restaurants, cafes and bars at its core. Irving Park Bordered roughly by Addison, Montrose, Pulaski and the Chicago River, Irving Park is a solid neighborhood of brick bungalows, three-flats and some larger apartment buildings. Immediate access to the expressway makes it convenient to downtown as well as O’Hare and the suburbs despite its Northwest location. The neighborhood has seen a smattering of condo conversions as well as a couple of larger projects. Old Irving Village, a 40-unit townhouse development at 3801 N. Milwaukee has units from the $280s, and Old Irving Pointe, 3849 N. Milwaukee, offers single-family houses from the $290s. Though these prices are not low for the Northwest Side, they compare favorably with new West Loop townhouses starting in the $400s. Old Irving Park is a historic district of charming frame houses, and the neighborhood boasts some great parks, including Horner and California. Though prices have been rising, the median single-family house is still a bargain at $175,000 in the uncongested area of wide lawns, large homes and quiet streets. Logan Square Bounded roughly by Western, Armitage, Diversey and Pulaski, Logan Square is a mostly Latino neighborhood defined by the wide, grassy boulevards that traverse it. The neighborhood is awash in a wave of condo conversions and several upscale new construction developments. Prices in certain projects are beginning to rival those in Bucktown, but overall the neighborhood remains a more affordable alternative to its trendy eastern neighbors, Bucktown and Wicker Park. During 1993, the Chicago Association of Realtors reported that eight condos changed hands in Logan Square. Last year, the trade group recorded nearly 300 transactions. The upward trend is clear, but the neighborhood is still edgy, with drug deals and unsavory street activity common on some blocks. But the beautiful boulevards, Latin flavor and convenient location make Logan Square preferable to homogenous and crowded lakefront neighborhoods for many buyers. Loop Though housing is not cheap in downtown Chicago, it’s likely to get much more expensive during the next decade. The Loop, broadly defined as the area bounded by Roosevelt, the Chicago River and the lake, was once a place for offices and industry, but the city and residential developers increasingly have worked to make it a place to live as well. Thousands of new lofts have been built in former factories, warehouses and office buildings, and new construction highrises have added to the skyline. The population of greater downtown has risen to around 115,000, a number the city expects to increase to 150,000 by 2010. That demographic trend, the popularity of downtown housing and the growth of high-tech companies in search of centralized and urbane locations are combining to make the Loop extremely hot. Parts of the Loop may still be short on amenities and restaurants after hours, but an effort is underway to encourage new and existing businesses to stay open late. The new theater district, new retail and the expansion of downtown schools such as the Art Institute and Columbia College also have added to the growth. With a foundation resting on the lakefront, park space that is constantly growing and improving, and world-class museums and institutions, the Loop will remain hot for some time.
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As
the nation’s economy continues its record expansion, and Chicago
reverses decades of decay for an unprecedented span of growth, the entire
city is, to use the real estate parlance, hot. The median price of a
single-family house in Chicago rose nearly 10.6 percent from 1997 to 1999,
when it was $136,000. The price of attached housing, a category that
includes townhouses and co-ops as well as condos, rose nearly 30 percent
during the same period. More condos than single-families changed hands,
and their median price was higher than that of houses in 1999, at
$177,500.
Like
Lincoln Park, Lakeview may top out if the economy slows. The median
attached housing unit there sold for $229,900 during 1999, an increase of
nearly 46 percent over two years earlier. Again, the neighborhood is solid
and growing and one of the most popular in the city, so buyers are
unlikely to lose money on a long-term investment. But the recent rapid
appreciation might slow to a creep with a turnaround in the stock market
and the economy.